You purchased a share of stock for $20. One year later, you received $1 as a dividend and sold the share for $29. What was your holding-period return?

2. You have been given this probability distribution for the holding-period return for KMP stock:

Stock of the Economy Probability HPR

Boom 0.30 18%

Normal growth 0.50 12%

Recession 0.20 -5%

What is the expected holding-period return for KMP stock? What is the expected standard deviation?

3. If a portfolio had a return of 18%, the risk-free asset return was 5%, and the standard deviation of the portfolio's excess returns was 34%, the risk premium would be?

4. Over the past year, you earned a nominal rate of interest of 8% on your money. The inflation rate was 3.5% over the same period. The exact actual growth rate of your purchasing power was?

5. Use the below information to answer the following question.

Investment Expected Return E(r) Standard Deviation

1 0.12 0.3

2 0.15 0.5

3 0.21 0.16

4 0.24 0.21

U = E(r) - (A/2)s2, where A = 4.0.

Based on the utility function above, which investment would you select? Additionally, What does A represent in the equation?